When looking from the outside in, a mortgage seems as just that—a mortgage. Sure, it is one of the most important things to consider when looking to purchase a home, but, like homes, they come in all sorts of shapes and sizes with different benefits build in. Today, we invite you to join us as we explain some of these loans, and help find which one is right for you!
Before we get things going, let’s set the baseline for this blog with the conventional mortgage.
Conventional loans are the stereotypical loan that you would get from your local bank or credit union. These loans rely heavily on the “typicals” to create your interest rate, such as credit score, down payment, and your debt-to-income ratio. Since these are relatively straightforward, they can be processed quickly, but keep in mind the fees that will come along with the loan, which can result in more money being spent at the closing table than initially imagined. If you have a phenomenal credit score, this is the best way to get a great rate.
Let’s say that your credit score is nowhere in the 700’s, and you’re looking to buy a home. While conventional lenders may jack up the rate, you can counter this with the help of a HUD loan, also known as a FHA loan
FHA/HUD loans are loans that are insured by the Federal Housing Administration, which makes it less risky for private lenders to loan out to you. For the price of two premiums being put on the mortgage, you can seal a mortgage with a credit score as low as 580, alongside a small down payment. This kind of loan has more hurdles to jump through than a conventional loan, but can be a great way to secure a home as a first-time home buyer.
In additional to the federal government, the New Jersey Housing and Mortgage Finance Agency has many different initiatives available to make homebuying more affordable, and help to keep you in your home if there comes a time to where you are having trouble paying your mortgage. Click on the link to see how the Great Garden State can help you buy a home.
Finally, we have a relatively new addition to the world of mortgages: the Veterans Affairs loan, more commonly called a VA loan.
VA loans, like a FHA loan, is insured by the Department of Veterans Affairs, which will help you snag a low interest rate. In addition to this, veterans can qualify for 100% financing, so no down payment is needed at closing. However, be warned that this process is notorious for taking a lot more time than a conventional loan would take, so as long as you have the time, a VA loan may be a great option. Most military members on active-duty, reservists, National Guard members, and veterans are eligible to apply.
Like a home or a car, you need to shop around for a mortgage and find the best one that will fit your needs. There are so many options out there, and many different opportunities available from the federal and state government to help, that you simply cannot consider all of them in a day. Take your time, consider all the variables, and we are confident that you will pick the right one for you in the end.
For more advice on home buying, or to get started, stop in our office today!